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AGL seeking $275M for pipeline replacemen

ATLANTA — Utility regulators asked AGL Resources Inc. on Thursday to consider gradually phasing in a proposed fee that will allow it to collect $275 million from customers to replace aging and potentially brittle plastic pipelines.

Company executives say an intensive program to replace pipes rather than a smaller piece-by-piece effort lowers the chance of a major pipeline failure and allows the utility to get cheaper prices on piping and labor. A consumer advocacy group and one former regulator have questioned whether the company has shown enough evidence to justify so large a program and asked why all customers pay the same program costs, regardless of how much gas they use.

Under a tentative deal, AGL Resources would charge its customers $1.29 per month to start replacing some 756 miles of the oldest plastic pipeline. Like many gas companies, AGL Resources started using plastic pipes in the 1960s because they were cheaper than metal pipes, easier to install and less susceptible to corrosion. However, several failures nationally showed early plastic pipes could become brittle over time and crack.

Public Service Commissioner Doug Everett asked the company to consider phasing in the proposed charges instead of assessing a flat fee. Under that plan, company officials said the fee would start at 49 cents per month and eventually grow to $1.45.

Commissioner Stan Wise said he wanted the agreement to clarify that AGL could start replacing 756 miles composed mostly of the oldest plastic piping, but he wanted the company to offer more information before the state allows the replacement of nearly 2,600 miles more.

A vote on the plan is expected next month.

Since Georgia deregulated its natural gas market, AGL Resources serves as the monopoly that owns the distribution pipelines. Companies that sell gas over the system bill customers for the cost of using those pipelines. AGL is on the verge of completing a program to swap out bare steel and cast iron pipes, some of which were decades old, decayed and prone to leaks.